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Blueprint for State Budget Reform

At the Civitas Institute’s main webpage, we have just concluded posting a four-part series examining options for meaningful budget reform for North Carolina.

Here’s a sample of the overview:

The ongoing state budget “crisis” strongly underscores the urgent need for North Carolina to adapt significant state budget reforms. For several decades, North Carolina has been on an unsustainable spending spree, with wild roller coaster-type swings along the way. Fortunately, there are three obvious ways to reverse this trend:

Link budgets to economic realities, not just politicians’ wish lists.

Put North Carolina taxpayers back in charge of approving new debt.

Force legislators and state agencies at reasonable intervals to justify all spending, not just spending increases.

……..

When one examines state government expenditures in the proper context, it becomes clear that the largest expenditure is state employee payroll. Wages, along with health and retirement benefits, for state government workers consume nearly $14 billion of North Carolina’s $20.2 billion General Fund budget. Specifically, wages come to $10.9 billion, health benefits for active employees (i.e. state-paid premiums for the State Health Plan) total $1.25 billion, contributions to pension, disability and death benefits come to $978.5 million, and state contributions for premiums for retirees enrolled in the State Health Plan amount to $579 million.

The next largest expenditure in the state budget is reimbursements to providers of medical care to Medicaid patients. For FY 2012-13, the state is estimated to spend $2.6 billion on services used by Medicaid enrollees.

Combining those two expenditures totals roughly $16.3 billion out of the $20.2 billion General Fund budget. In short, about 81 cents for every dollar spent belongs to those two categories. Clearly, any meaningful state budget reform must focus on state government payroll and Medicaid expenditures.

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